22 December 2008

Airlines Execution Tool - The ADM

For many of you who follow the Professor - there is an interesting sense of some of the arcane nature of the distribution business for ATT- Aviation, Travel and Tourism.

One of the weirder tools the industry uses to self-regulate is the ADM - Agent Debit Memo.

The concept is simple. If you fail to issue the ticket correctly no matter what the airline can issue a chargeback. FOR THE FULL FARE + Additional charges. BTW the full fare is what ever the airline charges for that class of service many times this is equivalent to the price of a small fortune. Somewhat akin to that price you see behind the door of a hotel room which bears no relation to the price you paid. Oh yes and you have usually only 30 days from the moment the airline finds the error (not when they notify you) to respond.

Voila, the airlines become Judge, Jury and Executioner. It is really hard to get one reversed... I know from bitter experience.

Interestingly you would think that the GDS would protect you if the reservation "autoprices". Just another quick explanation about GDS pricing and ticketing.

There are three types of pricing/ticketing. Note they are different processes and both have to be done according to the book.

Type 1: Autoprice and Autoticket. This is when the Reservation automatically prices at the fare the agent quoted to the passenger. Then the automatic entry to ticket is also used.
Type 2: Forced or Assisted pricing and ticketing. This is when you price and ticket with a small override. Since there are so many fares - you can tell the GDS to 'PRICE AND TICKET AT FARE TYPE YXW28). The system does your bidding and prices but at this point you have overridden the fare rules even though they might be accurate.
Type 3: Manual. I will enter the price manually and then ticket using my created entries. There is no protection if you do this.

Now the airlines protect the GDSs with a contract called a PCA - or Participating Carrier Agreement. In this the airline holds the GDS harmless from incorrect Type 1 pricing and ticketing. Well that's the theory. There is no such protection for Types 2 and 3.

However the airline shoots first and asks questions later. This process is the reverse of the "presumed innocent" logic. An agent is ALWAYS assumed to be a bad person and is guilty until the Agent proves himself innocent.

As you can see it can be quite hard to fix these situations where an agent does everything by the book but the fare is wrong in the mind of the airline. The GDS is supposed to protect the airline and that protection is supposed to extend to the agent in a Type 1 case. However you are long dead if you try fighting it.... Oh yes and did I tell you how the airlines collect the money from you? They take it from your tickets and commissions issued during the next cycle. So for example if you issued say 100 tickets and earned commissions and fees worth $10 per ticket. That would be $1000 total net revenue to you. Lets say you issued one ticket the airlines didn't like. For lets use a very small amount $10. But the ticket's full fare was $1000 plus a $100 fee. Then the total add collect of the ADM would be a net $80 you owed the airline and all your revenue would be wiped out.

Here is the math:

Revenue basis
Total gross revenue to agent $1,000

Cost of chargeback.
Charge back amount $1000
less amount of commission already paid $10
less amount of ticket already paid ($10)
Total = $980
Add $100 fee
Total chargeback value to airline = $1080.

Final calc +$1,000 - $1,080 = You owe the airline $80.

So you can see its not nice.

Here is a salutatory tale from an Agent in Florida - courtesy of a story in Travel Weekly.


Thanks Professor Scrooge for this story.

1 comment:

Professor Sabena said...

This is a message from Professor Robert in SF. You might want to see the original thread on the forum for the agent who had the ADM I mentioned in the blog.


Its worth a read